H.B. Fuller Reports First Quarter 2024 Results

Net revenue

$

%

$

%

Cost of sales

Gross profit

%

%

Selling, general and administrative expenses

)

)%

)

)%

Other income, net

%

%

Interest expense

)

)%

)

)%

Interest income

Income before income taxes and income from equity method investments

%

%

Income taxes

)

)%

)

)%

Income from equity method investments

Net income including non-controlling interest

%

%

Net income attributable to non-controlling interest

Net income attributable to H.B. Fuller

Basic income per common share attributable to H.B. Fuller

$

$

Diluted income per common share attributable to H.B. Fuller

$

$

Weighted-average common shares outstanding:

Basic

Diluted

Dividends declared per common share

$

$

Net income attributable to H.B. Fuller

$

$

Adjustments:

Acquisition project costs¹

Organizational realignment²

Project One

Other³

Discrete tax items⁴

)

Income tax effect on adjustments⁵

Adjusted net income attributable to H.B. Fuller⁶

Add:

Interest expense

Interest income

)

)

Adjusted Income taxes

Depreciation and Amortization expense⁷

Adjusted EBITDA⁶

Diluted Shares

Adjusted diluted income per common share attributable to H.B. Fuller⁶

Revenue

$

$

Adjusted EBITDA margin⁶

%

%

¹ Acquisition project costs include costs related to integrating and accounting for acquisitions.

² Organizational realignment includes costs incurred as a direct result of the organizational realignment program, including compensation for employees supporting the program, consulting expense and operational inefficiencies related to the closure of production facilities and consolidation of business activities.

³ Other expenses for the three months ended March 4, 2023 are primarily related to the write-off of unamortized debt fees and non-cash gains and losses related to legal entity consolidations.

⁴ Discrete tax items for the three months ended March 2, 2024 are related to various foreign tax matters as well as excess tax benefit related to U.S. stock compensation. Discrete tax items for the three months ended March 4, 2023 are related to various foreign tax matters offset by excess tax benefit related to U.S. stock compensation.

⁵ The income tax effect on adjustments represents the difference between income taxes on net income before income taxes and income from equity method investments reported in accordance with U.S. GAAP and adjusted net income before income taxes and income from equity method investments.

⁶ Adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures. Adjusted net income attributable to H.B. Fuller is defined as net income before the specific adjustments shown above. Adjusted diluted income per common share is defined as adjusted net income attributable to H.B. Fuller divided by the number of diluted common shares. Adjusted EBITDA is defined as net income before interest, income taxes, depreciation, amortization and the specific adjustments shown above. Adjusted EBITDA margin is defined as adjusted EBITDA divided by net revenue. The table above provides a reconciliation of adjusted net income attributable to H.B. Fuller, adjusted diluted income per common share attributable to H.B. Fuller, adjusted EBITDA and adjusted EBITDA margin to net income attributable to H.B. Fuller, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

⁷ Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller totaling ($2,422) and ($18) for the three months ended March 2, 2024 and March 4, 2023, respectively.

Net Revenue:

Hygiene, Health and Consumable Adhesives

$

$

Engineering Adhesives

Construction Adhesives

Corporate unallocated

Total H.B. Fuller

Segment Operating Income (Loss):

Hygiene, Health and Consumable Adhesives

$

$

Engineering Adhesives

Construction Adhesives

)

)

Corporate unallocated

Total H.B. Fuller

$

$

%

%

%

Income before income taxes and income from equity method investments

$

$

Adjustments:

Acquisition project costs¹

Organizational realignment²

Project One

Other³

Adjusted income before income taxes and income from equity method investments⁸

⁸ Adjusted income before income taxes and income from equity investments is a non-GAAP financial measure. Adjusted income before income taxes and income from equity investments is defined as income before income taxes and income from equity investments before the specific adjustments shown above. The table above provides a reconciliation of adjusted income before income taxes and income from equity investments to income before income taxes and income from equity investments, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Income Taxes

$

)

$

)

)

)

)

)

)

)

$

$

%

%

⁹ Adjusted income taxes and adjusted effective income tax rate are non-GAAP financial measures. Adjusted income taxes is defined as income taxes before the specific adjustments shown above. Adjusted effective income tax rate is defined as income taxes divided by adjusted income before income taxes and income from equity method investments. The table above provides a reconciliation of adjusted income taxes and adjusted effective income tax rate to income taxes, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Net revenue

$

$

$

$

%

%

%

%

¹⁰ Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit and adjusted gross profit margin is defined as gross profit and gross profit margin excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted gross profit and gross profit margin to gross profit and gross profit margin, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Selling, general and administrative expenses

$

)

$

)

¹¹ Adjusted selling, general and administrative expenses is a non-GAAP financial measure. Adjusted selling, general and administrative expenses is defined as selling, general and administrative expenses excluding the specific adjustments shown above. The table above provides a reconciliation of adjusted selling, general and administrative expenses to selling, general and administrative expenses, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Three Months Ended:

Net income attributable to H.B. Fuller

$

$

$

)

$

$

)

$

Adjustments:

Acquisition project costs¹

Organizational realignment²

Project One

Discrete tax items⁴

)

)

Income tax effect on adjustments⁵

Adjusted net income attributable to H.B. Fuller⁶

)

)

Add:

Interest expense

Interest income

)

)

Adjusted Income taxes

Depreciation and amortization expense⁷

Adjusted EBITDA⁶

Revenue

$

$

$

$

$

Adjusted EBITDA Margin⁶

%

%

%

%

%

Three Months Ended:

Net income attributable to H.B. Fuller

$

$

$

)

$

$

)

$

Adjustments:

Acquisition project costs¹

Organizational realignment²

Project One

Other³

Discrete tax items⁴

Income tax effect on adjustments⁵

Adjusted net income attributable to H.B. Fuller⁶

)

)

Add:

Interest expense

Interest income

)

)

Adjusted Income taxes

Depreciation and amortization expense⁷

Adjusted EBITDA⁶

Revenue

$

$

$

$

$

Adjusted EBITDA Margin⁶

%

%

%

%

%

Note: Adjusted EBITDA is a non-GAAP financial measure. The table above provides a reconciliation of adjusted EBITDA for each segment to net income attributable to H.B. Fuller for each segment, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

NMP = Non-meaningful percentage

Revenue growth versus 2023

Price

)%

Volume

Organic Growth¹²

)%

M&A

Constant currency

%

F/X

Total H.B. Fuller Net Revenue Change

Revenue growth versus 2023

Constant

Hygiene, Health and Consumable Adhesives

)%

)%

)%

%

)%

Engineering Adhesives

)%

)%

)%

%

)%

Construction Adhesives

Total H.B. Fuller

¹² We use the term "organic revenue" to refer to net revenue, excluding the effect of foreign currency changes and acquisitions and divestitures. Organic growth reflects adjustments for the impact of period-over-period changes in foreign currency exchange rates on revenues and the revenues associated with acquisitions and divestitures.

Net income attributable to H.B. Fuller

$

$

$

$

$

$

Adjustments:

Acquisition project costs¹

Organizational realignment²

Project One

Other

)

)

)

Discrete tax items¹³

)

Income tax effect on adjustments⁵

Adjusted net income attributable to H.B. Fuller⁶

Add:

Interest expense

Interest income

)

)

)

)

)

)

Adjusted Income taxes

Depreciation and Amortization expense¹⁴

Adjusted EBITDA⁶

¹³ Discrete tax items for the three months ended June 3, 2023 are related to various foreign tax matters offset by an excess benefit related to U.S. stock compensation. Discrete tax items for the three months ended September 2, 2023 are related to various U.S. and foreign tax matters offset by an excess benefit related to U.S. stock compensation. Discrete tax items for the three months ended March 2, 2024 are related to various foreign tax matters as well as excess tax benefit related to U.S. stock compensation. Discrete tax items for the three months and year ended December 2, 2023 are related to the tax impact of withholding tax recorded on earnings that are no longer permanently reinvested, as well as other various U.S. and foreign tax matters.

¹⁴ Depreciation and amortization expense added back for EBITDA is adjusted for amounts already included in adjusted net income attributable to H.B. Fuller. Depreciation and amortization expense added back was $18 for the three months ended June 3, 2023, ($348) for the three months ended September 2, 2023, ($1,036) for the three months ended December 2, 2023, ($2,422) for the three months ended March 2, 2024 and ($1,384) for the year ended December 2, 2023.

¹⁵ Trailing twelve months adjusted EBITDA is a non-GAAP financial measure and is defined as adjusted EBITDA for the twelve-month period ended on the date presented. The table above provides a reconciliation of trailing twelve month adjusted EBITDA to net income attributable to H.B. Fuller for the trailing twelve-month period presented, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Total debt

$

$

$

$

¹⁶ Net debt and net debt-to-adjusted EBITDA are non-GAAP financial measures. Net debt is defined as total debt less cash and cash equivalents. Net debt-to-adjusted EBITDA is defined as net debt divided by trailing twelve months adjusted EBITDA. The calculation of both of these non-GAAP financial measures is shown in the table above. The table above provides a reconciliation of each of these non-GAAP financial measures to total debt, the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Trade receivables, net

$

$

$

Inventory

Trade payables

Net working capital¹⁷

Net revenue three months ended

$

$

Annualized net revenue¹⁷

Net working capital as a percentage of annualized revenue¹⁷

%

%

¹⁷ Net working capital, annualized net revenue and net working capital as a percentage of annualized net revenue are non-GAAP financial measures. Net working capital is defined as trade receivables, net plus inventory less trade payables. Annualized net revenue is defined as net revenue for the quarter multiplied by four. Net working capital as a percentage of annualized net revenue is net working capital divided by annualized net revenue. The calculation of each of these non-GAAP financial measures is shown in the table above. The table above provides a reconciliation of each of these non-GAAP financial measures to the most directly comparable financial measure determined and reported in accordance with U.S. GAAP.

Assets

Current assets:

Cash and cash equivalents

$

$

Trade receivables (net of allowances of $11,658 and $11,080, as of March 2, 2024 and December 2, 2023, respectively)

Inventories

Other current assets

Total current assets

Property, plant and equipment

Accumulated depreciation

Property, plant and equipment, net

Goodwill

Other intangibles, net

Other assets

Total assets

Liabilities, non-controlling interest and total equity

Current liabilities

Notes payable

$

$

Trade payables

Accrued compensation

Income taxes payable

Other accrued expenses

Total current liabilities

Long-term debt

Accrued pension liabilities

Other liabilities

Total liabilities

Commitments and contingencies (Note 12)

Equity

H.B. Fuller stockholders' equity:

Preferred stock (no shares outstanding) shares authorized – 10,045,900

Common stock, par value $1.00 per share, shares authorized – 160,000,000, shares outstanding – 54,437,953 and 54,092,987 as of March 2, 2024 and December 2, 2023, respectively

$

$

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Total H.B. Fuller stockholders' equity

Non-controlling interest

Total equity

Total liabilities, non-controlling interest and total equity

Cash flows from operating activities:

Net income including non-controlling interest